Rating–General Rate Act 1967–Important decision on difficult point–Newly-erected hereditament–Proposal by valuation officer for inclusion in list–Action by rating authority to obtain rates more quickly by exercise of powers under section 6 to make amendments in rate–Apparent conflict between section 2(4) and section 6–Provided a proposal by valuation officer is on foot the rating authority may use powers under section 6 to bring new hereditament into charge–Observations on history of rating and ‘nebulous conception’ of action by authority on rate–Magistrates congratulated but overruled
This was an
appeal by case stated brought by Newcastle-under-Lyme Borough Council to
challenge a decision by magistrates at Newcastle-under-Lyme refusing an
application by the council for a distress warrant in respect of the nonpayment
of general rates by the respondent company, B Kettle Ltd. The claim for rates
was in respect of premises which had been recently erected by the company.
G E Moriarty
QC and A Porten (instructed by E Wetherell, Solicitor to Newcastle-under-Lyme
Borough Council) appeared on behalf of the appellants; W Glover QC and N J
Worsley (instructed by Tinsdill, Hollinshead & Moody) represented the
respondents.
Giving
judgment LORD WIDGERY CJ said: This is an appeal by case stated by justices for
the Petty Sessional Division of Newcastle-under-Lyme in respect of their
adjudication as a magistrates’ court sitting at Newcastle-under-Lyme on March
18 1976. They had before them a case of more than ordinary complexity, and I
will begin by expressing my appreciation of the efforts which they have made.
The case came before them as an application by the present appellants, the
Newcastle-under-Lyme Borough Council, for the grant of a distress warrant in
respect of non-payment of general rates against the respondent company, who are
B Kettle Ltd, in respect of their premises situate at Newcastle-under-Lyme,
where the appellant council claimed that the sum of £9,100-odd was owing to the
rating authority in respect of general rates, plus 50p in respect of costs.
An interesting
legal argument arose on the facts of this case because those facts were never
in any sense in dispute. What had happened was that the premises of Messrs
Kettle, which were the subject of the case, had been recently erected and had
come into rating recently. That meant of course initially that they did not
appear in the valuation list for the rating area concerned. Action was taken by
the valuation officer to bring the new hereditament into the valuation list by
making a proposal in the ordinary way. As I understand it, this proposal was
made on September 1 1975. If acceptable, or so far as it is acceptable, it
would affect the rate in respect of the premises for the year beginning April 1
1975, the rule being that such amendments date back to the beginning of the
rating year.
If nothing
else had been done, the proposal made by the valuation officer would have been
considered in due course by the local valuation court, and in due course an
assessment would have been fixed. The respondents would have been liable to pay
the rates on that assessment. But perhaps because the rating authority were
anxious to get on and did not think that the machinery was moving fast enough,
they took action themselves in order to obtain payment of rates on this
substantial new hereditament more quickly than they would have obtained payment
had they not taken direct action. As we shall see in a moment, the action which
they took is said to be authorised by the early sections of the General Rate
Act 1967, and particularly section 6.
It is
necessary to have a moment’s thought about the history of rating in order to
get this case into its proper context. It is not so very long ago that there
were no such things as valuation lists and valuation officers and where the
rate book was kept by the local authority and displayed, for all who were
interested, the names of the occupiers and particulars of the property and
their rateable value. If anybody was dissatisfied with the obligation to pay
rates which fell upon him, he could appeal to quarter sessions in cases of that
kind. All that has gone. We now have valuation lists, which are a record of the
new properties and their value for rating purposes. The valuation list is
prepared independently of the rating authority by the valuation officer subject
to the two-tier appeal of the local valuation court and now the Lands Tribunal.
The function of the rating authority in
the poundage which is to be charged having regard, on the one side, to the
total rateable value in that area, and, on the other side, to their estimate of
costs for the relevant period. It is their function to assess what the rate
poundage would be, and when they make that assessment and publish or approve
it, they are, in my judgment, making the general rate for the ensuing years. We
find in section 2(1) of the General Rate Act 1967 an obligation on every rating
authority from time to time to exercise their powers under the Act and make
such rates as will be sufficient to provide for the total estimated
expenditure.
That would all
be very straightforward and easy were it not for the fact that one finds,
floating in a rather nebulous form as a background to this modern legislation,
some conception that there exists a rate against which an appeal can be made.
Indeed the Act in section 7 specifically provides for the presentation of an
appeal to the court. But in section 7 an appeal against the rate goes to the
Crown Court. There are other instances as well in which one can see that the
draftsman of the Act of Parliament or author of the textbook does recognise
this somewhat nebulous conception of an obligation to pay rates which arises
from the rate, and that the local authority are the custodians not simply of
the decision as to what the poundage should be, but also that they can, by
altering the rate, make an effect upon the obligation of a particular occupier.
In this case we
start by looking at section 2(4) of the General Rate Act 1967 because this is
the main provision upon which the respondents’ case rested. It provides:
Subject to
the provisions of this Act, the general rate for any rating area . . . (b)
shall be made and levied in accordance with the valuation list in force for the
time being, except that, where a new valuation list is to come into force for
that area, a rate for the year, or any part of the year, beginning with the day
on which the new list is to come into force shall be made, and applied in
relation to particular hereditaments, by reference to that new list.
So the rate
shall be levied in accordance with the valuation list, and it implies it shall
not be levied other than in accordance with the valuation list. Here of course
the rating authority have sought to include in the rate the substantial sum
which has not yet appeared in the valuation list at all.
The
justification for departing from the general rule of section 2(4) is alleged to
be in section 6, which is the crucial provision. It provides in these terms in
subsection (1):
Subject to
the provisions of this section, the rating authority may at any time make such
amendments in a rate (being either the current or the last preceding rate) as
appear to them necessary in order to make the rate conform with the enactments
relating thereto, and in particular may–(a) correct any clerical or
arithmetical error in the rate; or (b) correct any erroneous insertions or
omissions or any misdescriptions. . . .
That is a
somewhat surprising provision to meet in this Act because it clearly
contemplates that there is this nebulous conception of the rate which can be
affected in its amount by action of the rating authority. So one finds there,
without any doubt at all, that Parliament in passing the General Rate Act did
contemplate that in the circumstances set out in section 6 the local authority
could amend the rate–not the valuation list, but the rate–with the result that
the rate would then bear the obligations attributable to its new form. In this
case it is said that section 6(1) authorises the local authority to amend the
rate so as to bring in the new hereditament of Messrs Kettle and the new value
for the purposes of the charge.
The section
goes on to authorise the rating authority under section 6(1)(c) to:
make such
additions to or corrections in the rate as appear to the authority to be
necessary by reason of–(i) the coming into occupation of any hereditament which
has been newly erected or which was unoccupied at the time of the making of the
rate.
That is not,
as I understand it, specifically relied upon by Mr Moriarty, but it is very
close to the facts of this case in any event. It authorises the rating
authority to amend the rate in consequence of the coming into occupation of a
new hereditament. It is very close indeed, as I say, to the facts of our case.
Then in
subsection (2) it provides:
Where the
effect of the amendment would be either–(a) to alter, otherwise than by way of
correction of a clerical or arithmetical error, the value on which a
hereditament is rated; or (b) to charge to the rate a hereditament not shown,
or not separately shown, in the valuation list, the rating authority shall not
make any amendment of the rate unless either the amendment is necessary to
bring the rate into conformity with the valuation list or a proposal for a
corresponding alteration to the valuation list has been made by the valuation
officer; . . .
I pause there
for a moment so as not to concentrate too much of the section in one passage of
comment. Here we find a substantial restriction on the rating authority’s
exercise of the powers in section 6(1). They shall not make any amendment to
the rate under that power unless certain factors are present, one of them being
that there is already on foot a proposal by the valuation officer. That of
course is our case. There is a proposal on foot by the valuation officer.
Therefore, if the rating authority otherwise have authority to act under this
section, they have got over the hurdle presented by that requirement without
any question.
Then to finish
subsection (2), it provides:
and if
effect, or full effect, is ultimately not given to such a proposal, and the
amount of the rate levied in pursuance of the amendment is affected, the
difference–(i) if too much has been paid, shall be repaid or allowed; or (ii)
if too little has been paid, shall be paid and may be recovered as if it were
arrears of the rate.
That means, as
I see it, that in the end the accountancy will be put right and every liability
will lie where it is supposed to lie, because what is contemplated here surely
is that, if the assessment goes into the list or is made in the rate pursuant
to the application of the rating authority, and the respondents in the present
appeal thereupon become liable to pay this substantial sum of rates, then if in
the end when the valuation officer’s proposal is finally sorted out it is found
that the obligation of the respondents is greater than they have paid, they
will have to pay out the difference. If it is found that the obligation of the
respondents is less, then they will have the amount returned to them. The
effect of this somewhat complex provision, as I see it, is to enable the local
authority to obtain payment more quickly in cases of this kind, because that
would be the consequence if Mr Moriarty’s argument for the appellants succeeds.
What is said
on the other side? Mr Glover, if I may
be allowed to say so, has given us an extremely attractive argument, and one
that I have profited by very much. Like all good arguments, it really hangs on
two main points. In the first place it is based on section 2(4) and the clear
obligation under that subsection not to levy a general rate except in
accordance with the values currently shown in the valuation list. What has
happened in the present case, of course, is that there has been a flagrant
breach of that rule, because the new hereditament going in is not in any sense
going in as part of the valuation list. The answer to that which is given by Mr
Moriarty is that the section is expressed to take effect subject to the
provisions of the Act, and one must regard this as a provision of the Act which
enables in special circumstances the section 2(4) rule, if I may so call it, to
be ignored.
But more
substantial than that is the argument put forward by Mr Glover based on the
absence of any resolution of the local authority to do what was done. I have
had some diffi-
only work on the facts which are disclosed, and no word has been said in the
case about whether there was a resolution or not. I do not myself consider that
any resolution was necessary except such resolution as in the end must
accompany all activities of the local authority. In the end, almost everything
which a local authority does has to be sanctioned by the resolution of some
committee, if not of the authority itself. But leaving that kind of thing
aside, I feel quite confident that it was not the intention of Parliament that
a specific resolution should be made every time it was desired to bring a new
hereditament into the rate under the powers relied upon in this case by the
local authority. Section 6 is drafted in clear and specific terms, and I feel
confident that it would be said if any further resolution were required.
The justices
did not base their decision on the argument which Mr Glover has put before us
today. They took another point, which I must say is very ingenious, although it
seems to me to be wrong. Their minds were directed at some time to the fact
that under section 7(3) of the Act it is thus provided:
Any rate made
by a rating authority shall be leviable and recoverable notwithstanding that
notice has been given of an appeal against the rate under this section, except
that, if such notice has been given by any person to the rating authority, then
until the appeal has been determined or abandoned no proceedings shall be
commenced or carried on to recover from that person any sum greater than that
at which the last effective rate was charged in respect of the hereditament to
which the appeal relates.
The
magistrates, no doubt thinking that this would be a very fair way of disposing
of the case, relied on that provision and said that on that account the local
authority’s action was unjustified. I think, again with respect, that they were
wrong, because this was not an appeal against a rate, as I have pointed out,
and I do not think that the provisions of section 7(3) have any relevance today
whatever. That is not to depart from the words of appreciation which I gave to
the magistrates earlier on on having to deal with a case which has not been
easy for us, or any of us.
In the result
I would say that the case for the local authority is made out, and I would
answer the question which is attached to the case in the affirmative by saying
that the justices were wrong in law in their interpretation of section 6(2). I
do not think as at present advised that this court would make any other order which
would assist.
CANTLEY J
agreed.
Also agreeing
PETER PAIN J said: I must say that the earlier sections of the General Rate Act
with which this case is concerned seem to me to be extremely difficult to
interpret, especially when they relate to the making of a rate and the
amendment of a rate. But, doing the best I can, I agree ultimately with what
has fallen from the Lord Chief Justice.
Appeal
allowed, with costs. Leave to appeal to the Court of Appeal granted.
